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Unaudited Consolidated Statement For Six Months Ended 31 August 2016
AFRICAN DAWN CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/020520/06)
JSE code: ADW
ISIN: ZAE000060703
("the Company" or "the Group" or "Afdawn")
Unaudited Consolidated Statement for six months ended 31 August 2016
Consolidated Statements of Financial Position as at 31 August 2016
31 August 2016 31 August 2015 29 February
2016
R'000 R'000 R'000
(Unaudited) (Unaudited) (Audited)
Assets
Non-Current Assets
Property, plant and equipment 791 1 070 879
Goodwill 8 076 8 076 8 076
Intangible assets 4 352 5 746 5 155
Deferred tax 335 - 381
13 554 14 892 14 491
Current Assets
Other financial assets - 354 312
Properties in possession 17 695 22 688 18 247
Trade and other receivables 32 022 38 287 35 981
Current tax receivable - 397 -
Cash and cash equivalents 1 916 10 262 3 005
51 633 71 988 57 545
Total Assets 65 187 86 880 72 036
Equity and Liabilities
Equity
Share capital and share premium 313 943 313 943 313 943
Accumulated loss (298 433) (283 678) (291 442)
15 510 30 265 22 501
Liabilities
Non-Current Liabilities
Loans from directors - 121 -
Deferred tax 943 1 196 1 125
Borrowings 838 11 142 7 829
Finance lease liabilities - 6 -
1 781 12 465 8 954
Current Liabilities
Current tax payable 15 902 14 963 15 054
Borrowings 16 002 14 054 12 524
Finance lease liabilities - 122 19
Loans from directors 628 731 487
Operating lease liability - - 28
Trade and other payables 15 364 14 280 12 469
47 896 44 150 40 581
Total Liabilities 49 677 56 615 49 535
Total Equity and Liabilities 65 187 86 880 72 036
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the six months ended 31 August 2016
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
Continuing operations (Unaudited) (Unaudited) (Audited)
Revenue 16 011 20 672 37 329
Cost of sales (287) (1 579) (839)
Gross profit 15 724 19 093 36 490
Other income 313 428 3 910
Operating expenses (21 298) (20 303) (42 836)
Operating (loss) (5 261) (782) (2 436)
Investment income 12 150 346
Profit on release from vendor liabilities - 4 095 -
Gain on fair value movement contingent consideration liability - - 2 000
Deemed interest expense - (313) (552)
Impairment to properties in possession - - (3 284)
Loss on non-current assets held for sale - (10) -
Finance costs (1 794) (1 750) (3 018)
(Loss)/profit before taxation (7 043) 1 390 (6 944)
Taxation 52 (536) 34
(Loss)/profit for the year (6 991) 854 (6 910)
(Loss)/profit attributable to:
Owners of the parent:
Continuing operations (6 991) 854 (6 910)
Basic loss per share (c) (0.79) 0.10 (0.79)
Headline loss per share (c) (0.79) 0.10 (0.79)
Consolidated Statements of Changes in Equity for the six months ended 31 August 2016
Share Share Shares Retained Ordinary
Capital Premium Total Earnings Shareholders
Equity
R'000 R'000 R'000 R'000 R'000
Balance at 28 February 2015 8 803 305 140 313 943 (284 532) 29 411
Total comprehensive income for the six months 31 Aug 2015 - - - 854 854
Balance at 31 August 2015 8 803 305 140 313 943 (283 678) 30 265
Total comprehensive (loss) for the six months Sep to Feb 2016 - - - (7 764) (7 764)
Balance at 29 February 2016 8 803 305 140 313 943 (291 442) 22 501
Total comprehensive (loss) for the six months 31 Aug 2016 - - - (6 991) (6 991)
Balance at 31 August 2016 8 803 305 140 313 943 (298 433) 15 510
Consolidated Statements of Cash Flows for the six months ended 31 August 2016
Six months Six months
year ended year ended Year ended
31 August 2016 31 August 2015 29 February 2016
R'000 R'000 R'000
(Unaudited) (Unaudited) (Audited)
Cash flows from operating activities
Cash generated by operations (note 11) 3 368 4 047 3 490
Interest income 12 150 346
Finance costs (1 794) (1 046) (2 080)
Tax paid 764 (1 162) (1 307)
Net cash from operating activities 2 350 1 820 449
Cash flows from investing activities
Purchase of property, plant and equipment (19) (97) (570)
Proceeds on disposal of property, plant and equipment - 4 248
Purchase of intangible assets (29) (246) (346)
Net cash from investing activities (48) (339) (668)
Cash flows from financing activities
Borrowings (repaid) / raised (3 513) (6 197) (11 280)
Finance lease payments (19) (54) (163)
Repayment of directors' loans 141 (365) (730)
Net cash from financing activities (3 391) (6 616) (12 173)
Total cash movement for the period/year (1 089) (5 135) (12 392)
Cash at the beginning of the period/year 3 005 15 397 15 397
Total cash at end of the period/year 1 916 10 262 3 005
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Reporting entity
African Dawn Capital Limited is domiciled in the Republic of South Africa. The unaudited consolidated interim financial statements
for the six months ended 31 August 2016 comprise the results of the Company and its subsidiaries ("the Group") and the Group's
interests in associates.
2. Basis of preparation
The consolidated interim financial statements have been prepared using the historical cost convention, as modified for certain items
measured at fair value.
The consolidated interim financial statements have been prepared in accordance with:
- International Financial Reporting Standards (IFRS);
- IAS 34 - Interim Financial Reporting;
- The requirements of the South African Companies Act (Act No 71 of 2008), as amended,
- The JSE Listings Requirements;
- The SAICA Financial Reporting Guides as issued by the Accounting Practices Committee; and
- The Financial Pronouncements as issued by Financial Reporting Standards Council
These consolidated interim financial statements have not been audited or reviewed by the Companies auditors.
These consolidated interim financial statements should be read in conjunction with the annual financial statements for the year
ended 29 February 2016.
3. Approval
The consolidated interim financial statements were prepared by Dylan Kohler Professional Accountant (SA) and supervised by the
chief financial officer, G Hope CA (SA). They were approved by the Board on 30 November 2016.
4. Significant accounting policies
The accounting policies adopted in the preparation of the consolidated interim financial information are consistent with those
applied in the consolidated annual financial statements for the year ended 29 February 2016. For a full list of standards and
interpretations, which have and have not been adopted, refer to the 29 February 2016 consolidated annual financial statements.
5. Significant judgements and accounting estimates
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ
from these estimates.
Except as described below, in preparing these consolidated financial statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of estimation certainty were the same as those that applied in the
consolidated financial statements for the year ended 29 February 2016 (refer to note 1.19 of the consolidated annual financial
statements for the year ended 29 February 2016)
6. Significant transactions
Shareholders are referred to the Company's respective SENS announcements dated 7 December 2015, 22 January 2016 and 28 June 2016
advising Shareholders of the proposed Elite Transaction and the SENS announcements dated 23 December 2015 and 11 April 2016 advising
Shareholders of the proposed Candlestick Transaction. Both Transactions were approved at General Meeting of the Company held at 18 October 2016.
7. Business combinations
There were no business combinations or disposals in the six-month period to 31 August 2016.
8. Events after the reporting period
Other than as explained below, the events after the reporting period are the same as those disclosed in the consolidated annual financial statements.
- A circular detailing the Elite Transactions, Candlestick Transactions ("the Transactions") and the proposed consolidation of
the Company's ordinary share capital on a 40 to 1 basis ("Consolidation") was distributed to Shareholders on 16 September 2016.
The Circular incorporated a notice convening a general meeting of shareholders for the purpose of considering and approving the Transactions,
the Consolidation and related matters .
- The Transactions and the Consolidation was approved at the General Meeting of the Company held at 18 October 2016 and all conditions
precedent have been fulfilled.
9. Impairment of trade and other receivables
The carrying amount of trade and other receivables was assessed for impairment at the interim dates and resulted in the following changes:
Impairment 31 Aug 2016 31 Aug 2015 29 Feb 2016
Movement in impairment provision 1 541 (1 593) (47 555)
10. Segment report
The Group's reportable segments are unchanged from those disclosed in the consolidated annual financial statements for the
year ended 29 February 2016. The segment report for the six-month period to 31 August 2015 has been included for comparative purposes.
All the segments operate only in South Africa, largely in the Gauteng and Western Cape provinces therefore no geographical
information is provided. Similarly, all non-current assets are in South Africa.
31 Aug 2016 Investment Rentals of
advisory and properties
investment in
management Micro finance possession Other Total
R'000 R'000 R'000 R'000 R'000
Revenue 2 362 11 619 2 449 (419) 16 011
Cost of sales (287) - - - (287)
Other income 35 278 - - 313
Investment income 10 - 1 1 12
Finance costs - (833) (365) (596) (1 794)
Operating expenses (3 293) (11 972) (1 617) (4 416) (21 298)
Impairment trade receivables - 1 766 (225) - 1 541
Bad debts written off - 1 230 88 - 1 318
Loss on disposal of property, plant and equipment - - - - -
Profit/(loss) before taxation (1 173) (909) 468 (5 429) (7 043)
Taxation - - (131) 183 52
Total comprehensive profit/(loss) (1 173) (909) 337 (5 246) (6 991)
Total assets 1 960 24 632 17 911 20 684 65 187
Total liabilities 1 226 37 759 21 369 (10 677) 49 677
Intangible assets 3 685 667 - - 4 352
Goodwill 8 076 - - - 8 076
Property, plant and equipment 83 599 7 102 791
31 Aug 2015 Investment Rentals of
advisory and properties
investment in
management Micro finance possession Other Total
R'000 R'000 R'000 R'000 R'000
Revenue 5 157 12 366 2 715 434 20 672
Cost of sales (1 653) (61) - 135 (1 579)
Other income 1 426 - 1 428
Investment income 57 246 1 (154) 150
Finance costs - (760) (372) (618) (1 750)
Operating expenses (2 990) (11 021) (1 711) (4 581) (20 303)
Impairment trade receivables - (2 040) 447 - (1 593)
Bad debts written off - 3 266 23 - 3 289
Gain on release from vendor liabilities - - - 4 095 4 095
Deemed interest expense - (199) - (114) (313)
Loss on disposal of property, plant and equipment - (6) - (4) (10)
Profit/(loss) before taxation 572 736 632 (550) 1 390
Taxation (190) - (177) (169) (536)
Total comprehensive profit/(loss) 382 736 455 (719) 854
Total assets 4 129 30 304 20 608 31 839 86 880
Total liabilities 1 509 43 454 21 437 (9 786) 56 615
Intangible assets 4 720 1 020 - - 5 746
Goodwill 8 076 - - - 8 076
Property, plant and equipment 80 623 11 356 1 070
11. Cash generated from / (used in) operations
31 Aug 31 Aug 29 Feb
2016 2015 2016
R'000 R'000 R'000
(Loss)/profit before taxation (7 043) 1 390 (6 944)
Adjustments for:
Depreciation 107 150 394
Loss/(profit) on disposal of property, plant and equipment - 10 (13)
Movement in operating lease liability (28) (23) 5
Investment income (12) (150) (346)
Finance costs 1 794 1 398 2 080
Fair value of contingent consideration - - (2 095)
Fair value adjustment - (4 095) (2 000)
Non-cash finance costs (penalties and interest on income tax) - - 938
Amortisation 832 779 1 670
Deemed interest expense - 313 552
Impairment of properties in possession - - 3 283
Impairment of intangible asset - - -
Changes in working capital: - -
Properties in possession 552 280 1 439
Trade and other receivables 3 959 1 548 3 853
Trade and other payables 2 895 2 551 736
Deferred income - (474) (474)
Other financial assets 312 370 412
3 368 4 047 3 490
12. Related parties
Related party relationships - other than as disclosed below, there have been no significant changes from the disclosures in the
consolidated annual financial statements for the year ended 29 February 2016.
Executive and non-executive directors As per directors' report in the consolidated annual financial statements
for the year ended 29 February 2016.
Other key management DD Breedt
Related party transactions 31 August 2016 31 August 2015
R'000 R'000
Interest paid to directors
WJ Groenewald 19 -
G Hope 31 -
Release from obligation to settle liabilities relating to the acquisition of Knife Capital
EA van Heerden - 1,365
JK van Zyl - 1,365
A Bohmert - 1,365
Balance of directors loans relating to the acquisition of Knife
Capital
EA van Heerden 41 122
JK van Zyl 41 122
A Bohmert 41 122
Balance of directors loans relating to short term cash advances @ 2% interest per month
WJ Groenewald 18 -
G Hope 487 -
13. Earnings / (loss) per share
Basic and diluted earnings / (loss) per share
Basic and diluted earnings / (loss) per share are calculated by dividing the profit / (loss) attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue during the period (excluding ordinary shares held as
treasury shares).
31 August 2016 31 August 2015
Basic and diluted earnings / (loss) per share
From continuing operations (c) (0.79) 0.10
(0.79) 0.10
Reconciliation of weighted average number of ordinary shares '000 '000
Number of ordinary shares in issue 880 271 880 271
Adjusted for:
Treasury shares cancelled (3 269) -
Weighted average number of shares used for loss and headline
loss per share 877 002 880 271
31 August 2016 31 August 2015
Headline and diluted headline earnings / (loss) per share
From continuing operations (c) (0.79) 0.10
Headline earnings / reconciliation
Profit /(loss) for the period for continuing operations (6 991) 854
Adjusted for:
Loss / (profit) on disposal of property, plant and equipment - 10
Tax effect on disposal of property, plant and equipment - (3)
Headline earnings/(loss) for the period (6 991) 861
14. Comments from The Board
REVIEW FOR THE PERIOD
The Board is not satisfied with the results as the operational performance was worse than that of the comparable period. The operating results were
influenced by various factors, but especially by the delay in finalising the SARS matter. Knife Capital team's focus on establishing an investment fund
resulted in lower advisory revenues and no new transactional revenue during this six month period. This resulted in a decrease in revenue from Investment
advisory and investment management from R5,16 million to R2.36 million. The establishment of an investment fund was important to regain investment
relevance while Afdawn dispose of it's other non-core assets. Elite Group's revenue was R0.747 million lower mainly due to lower interest rates and fees as
determined by the Department of Trade and Industry as well as a shortage in additional funding to grow the debtors book. Overall revenue was R4.66 million
lower to R 16,01million for the period to 31 August 2016. Operating expenses excluding the once-off circular cost (R0,814 million) increased by 0,89% to
R20,48 million. An operating loss of R5,26 million was recorded versus an operating loss of R0.78 million for the comparible period last year.
Net cash from operating activities for the period to 31 August 2016 was R2.35 million versus R1,82 million the previous comparable period. After borrowings
were further reduced by R3,51 million total cash reduced by R1,08 million to R1.92 million since the 28 February 2016.
To lower operating expenses management of both Knife Capital and Afdawn have reduced their monthly salaries.
The resolution of the SARS matter is becoming increasingly critical to the performance of the group.
The Board would like to thank all stakeholders for the continued support during another difficult period.
DIRECTORATE
The directors in office at the date of this report are:
Director Office Designation
WJ Groenewald Chief Executive Officer
(CEO) and acting Chairman Executive
HH Hickey Chair Audit Committee Independent Non-Executive
GB Hope Chief Financial Officer Executive
V Lessing Independent Non-Executive
SM Roper Independent Non-Executive
There have been no changes to the board of directors since February 2016.
GOING CONCERN
These results have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that
funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business. The Directors are of the opinion that the working capital available in the Afdawn
Group is sufficient for the Afdawn Group's ongoing present working capital requirements and will post implementation of the Transactions, be adequate for
at least 12 month from the date of issue of the interim results. The successful conclusion of the Transactions is critical to the ongoing cashflow of the
Afdawn Group.
SOUTH AFRICAN REVENUE SERVICES ("SARS")
The income tax debt and VAT debt arose mainly in the financial years of 2007 and 2008 and total debt owing of just over R20 million,made up of about R10
million of debt, and R10 million penalties and interest, that are fully provided for in the Group accounts.
A Section 200 application was made in June 2013 and was declined in May 2015 on the basis that Afdawn Company's financial position did not warrant a
compromise. A submission was made by Bowmans on behalf of Afdawn to SARS in October 2015 to pay off the debt over period of time as adequate funds
was not available to settle the outstanding amount. After signing the Elite and Candlestick transactions it was felt Afdawn could offer SARS a better
Settlement for all debt owing. A meeting was held with between Bowman's and SARS in June 2016. The feedback after the meeting was that all Afdawn
Group companies were to form part of the section 200 application.
Before SARS would even consider any form of settlement, Afdawn had to get all outstanding tax returns submitted for all its legal entities and it had to deal
with VAT audits for 8 selected periods and further had to resubmit revised returns for Afdawn for all the VAT periods from 2008 - 2010.
SARS is still in the process of assessing these returns. The final SARS application is close to being finalised and is expected to be submitted to SARS in early
December.
Afdawn has estimated income tax losses of R65 million and will have an estimated R200 million of capital losses once the Elite and Candlestick transactions
are all finalised.
DIVIDENDS
No dividends have been declared for this interim period (August 2015: R0)
PROSPECTS
The proceeds of the Transactions will be used to reduce liabilities, fund ongoing commitments and for potential investments by Afdawn. Following the
successful conclusion of the disposal of the non-core legacy assets and the settlement of SARS claim, Afdawn will be rebranded to articulate the vision and
strategy in a visual manner and will actively seek new investments in fulfilment of its vision and strategy. Following the conclusion of the transactions Knife
Capital and Grindstone Accelerator will be the only operating assets within the Afdawn Group.
Registered office Company secretary
202 Waterfront Terraces A Rich (on behalf of Statucor Proprietary Limited)
Waterfront Road Auditors
Tygervalley Waterfront Grant Thornton Cape Inc.
7530 Designated Advisor
Tel: +27 (21) 914 5566 PSG Capital
Transfer secretaries
Computershare Investor Services Proprietary Limited 70 Marshall Street, Johannesburg, 2001
Date:
30 November 2016
Date: 30/11/2016 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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